Exhibit 2(6)
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1993, AS
AMENDED, OR ANY STATE SECURITIES LAWS. IT MAY NOT BE SOLD OR OFFERED FOR SALE
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAW OR AN APPLICABLE EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS. THIS WARRANT MAY NOT BE TRANSFERRED TO ANY RESIDENT
OF THE PROVINCE OF ALBERTA UNTIL AUGUST 17, 1998.
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May 19, 1998 XENOTECH INC. No. 98A-2
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Common Share Purchase Warrant
XENOTECH INC., an Alberta corporation (the "Company"), hereby certifies
that for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, WESTGATE INTERNATIONAL, L.P., having an address c/o
Midland Bank Trust Corporation (Cayman) Limited, P.O. Box 1109, Mary Street
Grand Cayman, Cayman Islands, British West Indies ("Purchaser") or any other
Warrant Holder is entitled, on the terms and conditions set forth below, to
purchase from the Company at any time beginning on the date hereof and ending
twenty-four (24) months after the date hereof (the "Term"), 6,250,000 fully paid
and nonassessable common shares, of the Company (the "Common Shares"), at a
purchase price per share of Cdn. $0.40 per share (the "Purchase Price"), as the
same may be adjusted pursuant to Section 5 herein. Notwithstanding the
foregoing, upon the listing of the Common Shares on the NNM or the NASDAQ Small
Cap (each as defined in the Investment Agreement) (In either case, a "U.S.
Listing"), if not prohibited by the rules of such trading market, the Term shall
be automatically extended without further action, such that this Warrant shall
be exercisable for a period of thirty six (36) months from the date hereof. The
Company shall provide the Warrant Holder with prompt written notice of any U.S.
Listing, which notice shall indicate whether the aforementioned extension of the
Term shall have been effected.
1. DEFINITIONS.
(a) the term "Warrant Holder" shall mean the Purchaser or any assignee
of all or any portion of this Warrant.
(b) the term "Warrant Shares" shall mean the Common Shares or other
securities issuable upon exercise of this Warrant.
(c) the term "Registration Rights Agreement" shall mean the
Registration Rights Agreement, dated May 19, 1998, between the Company and the
Purchaser.
(d) the term "Investment Agreement" shall mean the Investment Agreement
dated May 19, 1998, between the Company and the Purchaser.
(e) the term "Warrant Option Agreement" shall mean the Warrant Option
Agreement dated May 19, 1998, between the Purchaser and Red Reef Limited.
2. EXERCISE OF WARRANT.
(a) This Warrant may be exercised by the Warrant Holder, in whole or in
part, at any time and from time to time by the following method:
Subject to the rights of Red Reef pursuant to the terms of the Warrant
Option Agreement, the Warrant Holder may surrender this Warrant,
together with the form of subscription at the end hereof duly executed
by the Warrant Holder ("Subscription Notice"), at the offices of the
Company or any transfer agent for the Common Shares.
(b) In the event that the Warrant is not exercised in full, the number
of Warrant Shares shall be reduced by the number of such Warrant Shares for
which this Warrant is exercised, and the Company, at its expense, shall
forthwith issue and deliver to or to the order of the Warrant Holder a new
Warrant of like tenor in the name of the Warrant Holder or as the Warrant Holder
(upon payment by the Warrant Holder of any applicable transfer taxes) may
request, reflecting such adjusted Warrant Shares.
3. DELIVERY OF STOCK CERTIFICATES.
(a) Subject to the terms and conditions of this Warrant, as soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within three (3) "trading days" (as defined below) thereafter, the Company
shall transmit the certificates (together with any other stock or other
securities or property to which Warrant Holder is entitled upon exercise) by
messenger or overnight delivery service to reach the address designated by such
holder within three (3) trading days after the receipt of the Subscription
Notice ("T + 3") and the purchase price for the Warrant Shares purchased
pursuant thereto.
The term "trading day" means a day on which there is trading on the
Alberta Stock Exchange or such other market or exchange on which the Common
Shares are then traded.
(b) This Warrant may not be exercised as to fractional Common Shares.
In the event that the exercise of this Warrant, in full or in part, would result
in the issuance of any fractional Common Shares, then in such event the Warrant
Holder shall be entitled to cash equal to the fair market value of such
fractional share. For purposes of this Warrant, "fair market value" shall equal
the closing trading price of the Common Shares on the then principal trading
exchange or market for the Common Shares (the
"Principal Market") on the date of determination or, if the Common Shares are
not listed or admitted to trading on any Canadian or U.S. national securities
exchange, the average of the closing bid and asked prices on the
over-the-counter markets as furnished by any member of a Canadian or U.S.
stock exchange reasonably selected from time to time by the Company for that
purpose and reasonably acceptable to the Warrant Holder, or, if the Common
Shares are not listed or admitted to trading on any Canadian or U.S. national
securities exchange or traded over-the-counter and the average price cannot
be determined as contemplated above, the fair market value of the Common
Shares shall be as reasonably determined in good faith by the Company's Board
of Directors with the concurrence of the Warrant Holder.
4. (A) REPRESENTATIONS AND COVENANTS OF THE COMPANY.
(a) The Warrant Shares have been approved for listing on The Alberta
Stock Exchange, subject to issuance.
(b) The Company shall comply with its obligations under the
Registration Rights Agreement with respect to the Warrant Shares.
(c) The Company shall take all necessary action and proceedings as may
be required and permitted by applicable law, rule and regulation, including,
without limitation, the notification of the Principal Market, for the legal and
valid issuance of this Warrant and the Warrant Shares to the Warrant Holder
under this Warrant.
(d) From the date hereof through the last date on which this Warrant is
exercisable, the Company shall take all steps reasonably necessary and within
its control to insure that it maintains its status as a "reporting issuer not in
default" under the Securities Act (Alberta) and the Common Shares remain listed
on the Principal Market.
(e) The Company shall at all times reserve and keep available, solely
for issuance and delivery as Warrant Shares hereunder, such Common Shares as
shall from time to time be issuable hereunder.
(f) The Warrant Shares, when issued in accordance with the terms
hereof, will be duly authorized and, when paid for or issued in accordance with
the terms hereof, shall be validly issued, fully paid and non-assessable.
(B) REPRESENTATIONS AND COVENANTS OF THE PURCHASER.
The Purchaser shall not resell the Warrant Shares in the United States,
unless such resale is pursuant to an effective registration statement under the
Securities Act or pursuant to an applicable exemption from such registration
requirements, in which case it will deliver a legal opinion of counsel to such
effect. The Purchaser shall comply with its obligations under the Registration
Rights Agreement.
5. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES. The number of
any kind of securities purchasable upon exercise of this Warrant and the
Purchase Price shall be subject to adjustment from time to time as follows:
(a) SUBDIVISIONS, COMBINATIONS AND OTHER ISSUANCES. If the Company
shall at any time after the date hereof but prior to the expiration of this
Warrant subdivide its outstanding securities as to which purchase rights under
this Warrant exist, by split-up, spin-off, or otherwise, or combine its
outstanding securities as to which purchase rights under this Warrant exist, the
number of Warrant Shares as to which this Warrant is exercisable as of the date
of such subdivision, split-up, spin-off or combination shall forthwith be
proportionately increased in the case of a subdivision, or proportionately
decreased in the case of a combination. Appropriate adjustments shall also be
made to the Purchase Price payable per share, but the aggregate Purchase Price
payable for the total number of Warrant Shares purchasable under this Warrant as
of such date shall remain the same.
(b) STOCK DIVIDEND. If at any time after the date hereof the Company
declares a dividend or other distribution on Common Shares payable in Common
Shares or other securities or rights convertible into Common Shares ("Common
Share Equivalents") without payment of any consideration by holders of Common
Shares for the additional Common Shares or the Common Shares Equivalents
(including the additional Common Shares issuable upon exercise or conversion
thereof), then the number of Common Shares for which this Warrant may be
exercised shall be increased as of the record date (or the date of such dividend
distribution if no record date is set) for determining which holders of Common
Shares shall be entitled to receive such dividends, in proportion to the
increase in the number of outstanding shares (and Common Shares issuable upon
conversion of all such securities convertible into Common Shares) of Common
Shares as a result of such dividend, and the Purchase Price shall be adjusted so
that the aggregate amount payable for the purchase of all the Warrant Shares
issuable hereunder immediately after the record date (or on the date of such
distribution, if applicable), for such dividend shall equal the aggregate amount
so payable immediately before such record date (or on the date of such
distribution, if applicable).
(c) OTHER DISTRIBUTIONS. If at any time after the date hereof the
Company distributes to holders of its Common Shares any shares of its capital
stock, any evidence of indebtedness or any of its assets (including cash), then
the number of Warrant Shares for which this Warrant is exercisable shall be
adjusted to equal: (i) the number of Warrant Shares for which this Warrant is
exercisable immediately prior to such event, (ii) multiplied by a fraction, (A)
the numerator of which shall be the "Fair Market Value" (as defined in Section
5(f) hereof) per Common Share on the record date for the dividend or
distribution, and (B) the denominator of which shall be the Fair Market Value
per Common Share on the record date for the dividend or distribution minus the
amount allocable to one Common Share of the value (as jointly determined in good
faith by the Board of Directors of the Company and the Warrant Holder) of any
and all such evidences of indebtedness, shares of capital stock, other
securities or property, so distributed. The Purchase Price shall be adjusted to
equal: (i) the Purchase Price in effect immediately before the occurrence of any
event (ii) multiplied by a fraction, (A)
the numerator of which is the number of Warrant Shares for which this Warrant is
exercisable immediately before the adjustment, and (B) the denominator of which
is the number of Warrant Shares for which this Warrant is exercisable
immediately after the adjustment.
(d) MERGER, ETC. If at any time after the date hereof there shall be a
merger or consolidation of the Company with or into or a transfer of all or
substantially all of the assets of the Company to another entity, then the
Warrant Holder shall be entitled to receive upon such transfer, merger or
consolidation becoming effective, and upon payment of the aggregate Purchase
Price then in effect, the number of shares or other securities or property of
the Company or of the successor corporation resulting from such merger or
consolidation, which would have been received by Warrant Holder for the shares
of stock subject to this Warrant had this Warrant been exercised just prior to
such transfer, merger or consolidation becoming effective or to the applicable
record date thereof, as the case may be. The Company will not merge or
consolidate with or into any other corporation, or sell or otherwise transfer
its property, assets and business substantially as an entirety to another
corporation, unless the corporation resulting from such merger or consolidation
(if not the Company), or such transferee corporation, as the case may be, shall
expressly assume prior to the consummation thereof, by supplemental agreement
reasonably satisfactory in form and substance to the Warrant Holder, the due and
punctual performance and observance of each and every covenant and condition of
this Warrant to be performed and observed by the Company.
(e) RECLASSIFICATION, ETC. If at any time after the date hereof there
shall be a reorganization or reclassification of the securities as to which
purchase rights under this Warrant exist into the same or a different number of
securities of any other class or classes, then the Warrant Holder shall
thereafter be entitled to receive upon exercise of this Warrant, during the
period specified herein and upon payment of the Purchase Price then in effect,
the number of shares or other securities or property resulting from such
reorganization or reclassification, which would have been received by the
Warrant Holder for the shares of stock subject to this Warrant had this Warrant
at such time been exercised.
(f) PURCHASE PRICE ADJUSTMENT. In the event that the Company issues or
sells any Common Shares or securities which are convertible into or exchangeable
for its Common Shares or any convertible securities, or any warrants or other
rights to subscribe for or to purchase or any options for the purchase of its
Common Shares or any such convertible securities (other than shares or options
issued or which may be issued pursuant to the Company's employee or director
option plans not to exceed the aggregate of (i) the number of Common Shares
issuable pursuant to such options on the date hereof, and (ii) 10% of the Common
Shares outstanding on the date hereof) at an effective purchase price per share
which is less than the closing trading price of the Common Shares on the
Principal Market on the trading day next preceding such issue or sale ("Fair
Market Value"), then in each such case, the Purchase Price in effect immediately
prior to such issue or sale shall be reduced effective concurrently with such
issue or sale to an amount determined by multiplying the Purchase Price then in
effect by a fraction, (x) the numerator of which shall be the sum of (1) the
number of Common Shares outstanding
immediately prior to such issue or sale, including, without duplication, those
deemed to have been issued under any provision of this Warrant plus (2) the
number of Common Shares which the aggregate consideration received by the
Company for such additional shares would purchase at such Fair Market Value; and
(y) the denominator of which shall be the number of Common Shares outstanding
immediately after such issue or sale including, without duplication, those
deemed to have been issued under any provision of the Warrants. The number of
shares which may be purchased hereunder shall be increased proportionately to
any reduction in Purchase Price pursuant to this Section 5(f), so that after
such adjustments the aggregate Purchase Price payable hereunder for the
increased number of shares shall be the same as the aggregate Purchase Price in
effect just prior to such adjustments.
For the purposes of the forgoing adjustment, in the case of the
issuance of any convertible securities, warrants, options or other rights to
subscribe for or to purchase or exchange for, Common Shares ("Convertible
Securities"), the maximum number of Common Shares issuable upon exercise,
exchange or conversion of such Convertible Securities shall be deemed to be
outstanding, provided that no further adjustment shall be made upon the
actual issuance of Common Shares upon exercise, exchange or conversion of
such Convertible Securities. If any of the convertible securities, warrants,
option or other rights to subscribe for or to purchase or exchange for Common
Shares are issued or granted but expire without being converted or exercised,
then such rights shall revert and be calculated back to the Company;
provided, that any such recalculation shall not effect any prior exercises of
this Warrant.
6. NO IMPAIRMENT. The Company will not, by amendment of its constating
documents (including its Certificates of Incorporation or By-Laws) or through
any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Warrant Holder against impairment. Without limiting
the generality of the foregoing, the Company will take all such action as may be
reasonably necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares on the exercise of
this Warrant.
7. NOTICE OF ADJUSTMENTS - NOTICES. Whenever the Purchase Price or number
of Warrant Shares purchasable hereunder shall be adjusted pursuant to Section 5
hereof, the Company shall execute and deliver to the Warrant Holder a
certificate setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated and the Purchase Price and number of shares purchasable hereunder
after giving effect to such adjustment, and shall cause a copy of such
certificate to be mailed (by first class mail, postage prepaid) to the Warrant
Holder.
8. RIGHTS AS SHAREHOLDER. Prior to exercise of this Warrant, the Warrant
Holder shall not be entitled to any rights as a shareholder of the Company with
respect to the Warrant Shares, including (without limitation) the right to vote
such shares, receive dividends or other distributions thereon or be notified of
stockholder meetings. However, in the event of any taking by the Company of a
record of the holders of any class of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend or other
distribution, any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive
any other right, the Company shall mail to each Warrant Holder, at least 10 days
prior to the date specified therein, a notice specifying the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right, and the amount and character of such dividend, distribution or right.
9. REPLACEMENT OF WARRANT. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of the Warrant and,
in the case of any such loss, theft or destruction of the Warrant, on delivery
of an indemnity agreement or security reasonably satisfactory in form and amount
to the Company or, in the case of any such mutilation, on surrender and
cancellation of such Warrant, the Company at its expense will execute and
deliver, in lieu thereof a new Warrant of like tenor.
10. CONSENT TO JURISDICTION; CHOICE OF LAW.
(a) This agreement shall be governed by and interpreted in accordance
with the laws of Alberta and the applicable laws of Canada, and the parties
hereto attorn to the jurisdiction of the Courts of the Province of Alberta.
11. ENTIRE AGREEMENT; AMENDMENTS. This Warrant, the Exhibits hereto and the
provisions contained in the Investment Agreement or the Registration Rights
Agreement and incorporated into this Warrant and the Warrant Shares contain the
entire understanding of the parties with respect to the matters covered hereby
and thereby and, except as specifically set forth herein and therein, neither
the Company nor the Warrant Holder makes any representation, warranty, covenant
or undertaking with respect to such matters. No provision of this Agreement may
be waived or amended other than by a written instrument signed by the Party
against whom enforcement of any such amendment or waiver is sought.
12. NOTICES. Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be effective (a) upon hand
delivery or delivery by telex (with correct answer back received), telecopy or
facsimile (on receipt of the fax confirmation) at the address or number
designated below (if delivered on a business day during normal business hours
where such notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second
business day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be:
to the Company:
Xenotech Inc.
407 2nd Street S.W.
No. 1600
Calgary, Alberta T2P 2Y3
Attention: R. Michael Zwack
Telephone: (403) 237-9050
Telecopier: (403) 262-7896
with a copy to:
Vorys, Sater, Seymour and Pease
1828 L Street, N.W.
Washington, D.C.
Attention: James K. Alford, Esq.
Telephone: (202) 467-8801
Telecopier: (202) 467-8900
to Purchaser:
Westgate International, L.P.
c/o Midland Bank Trust Corporation (Cayman) Limited
P.O. Box 1109
Mary Street
Grand Cayman
Cayman Islands
British West Indies
Attention: Greg Taylor
Telephone: (809) 949-7755
Telecopier: (809) 949-7634
Either Party hereto may from time to time change its address for notices under
this Section 12 by giving at least 10 days prior written notice of such changed
address to the other party hereto.
13. MISCELLANEOUS. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the Party
against which enforcement of such change, waiver, discharge or termination is
sought. The headings in this Warrant are for purposes of reference only, and
shall not limit or otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision.
14. ASSIGNMENT. Subject to compliance with applicable securities laws, this
Warrant may be transferred or assigned, in whole or in part, at any time and
from time to time by then Warrant Holder by submitting this Warrant to the
Company together with a duly executed Assignment in substantially the form and
substance of the Form of Assignment which accompanies this Warrant and, upon the
Company's receipt hereof, and in any event, within three (3) business days
thereafter, the Company shall issue a Warrant to the Warrant Holder to evidence
that portion of this Warrant, if any shall not have been so transferred or
assigned.
Dated: May 19, 1998 XENOTECH INC.
By:
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Neil W. Speakman
Chairman
WESTGATE INTERNATIONAL, L.P.
by: Martley International, Inc.,
General Partner
By:
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Paul Singer, President
(SUBSCRIPTION NOTICE)
FORM OF WARRANT EXERCISE
(TO BE SIGNED ONLY ON EXERCISE OF WARRANT)
TO _____________________
The undersigned, the holder of the within Warrant, hereby
irrevocably elects to exercise this Warrant for, and to purchase thereunder,
________ Common Shares of Xenotech Inc., an Alberta corporation (the "Company"),
and herewith makes payment of Cdn.$____________ therefor; or
The undersigned requests that the certificates for such shares
be issued in the name of, and delivered to ________________, whose address is
_________________________.
Dated:
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(Signature must conform to name of holder
as
specified on the face of the Warrant)
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(Address)
FORM OF ASSIGNMENT
(TO BE SIGNED ONLY ON TRANSFER OF WARRANT)
For value received, the undersigned hereby sells, assigns, and transfers unto
________________ the right represented by the within Warrant to purchase ___
Common Shares of Xenotech Inc., an Alberta corporation, to which the within
Warrant relates, and appoints _______ Attorney to transfer such right on the
books of Xenotech Inc., an Alberta corporation, with full power of substitution
of premises.
Dated:
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(Signature must conform to name of holder
as
specified on the face of the Warrant)
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(Address)
Signed in the presence of:
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